The exception for the customs union was partly directed towards the creation of the European Economic Community (EC) in 1958. The COMMUNITY, originally made up of six European countries, is now known as the European Union (EU) and has twenty-seven European countries. The EU has gone beyond simply reducing barriers to trade between Member States and creating a customs union. It has moved towards even greater economic integration by becoming a common market – an agreement that removes obstacles to the mobility of factors of production such as capital and labour between participating countries. As a common market, the EU also coordinates and harmonises the fiscal, industrial and agricultural policies of each country. In addition, many EU members have created a single currency area by replacing their national currencies with the euro. These occur when one country imposes trade restrictions and no other country responds. A country can also unilaterally ease trade restrictions, but this rarely happens. This would put the country at a competitive disadvantage. The United States and other developed countries are only doing this as a kind of foreign aid to help emerging countries strengthen strategic industries that are too small to be a threat. It helps the economies of emerging economies grow and creates new markets for U.S. exporters. IMF member countries give funds to a pool from which they can borrow if they have balance of payments problems.
The reason for this agreement is that private international capital markets function imperfectly and many countries have limited access to financial markets. Without access to IMF funds, many countries can only correct large imbalances in external payments through drastic measures that can have adverse effects on their own economies and the world`s economies. The IMF provides countries in need with other sources of financing that would not otherwise be available to them. The best possible outcome of trade negotiations is a multilateral agreement that includes all major trading countries. Then, free trade will be extended to allow many participants to get the most out of trade. After World War II, the United States helped create the General Agreement on Tariffs and Trade (GATT), which quickly became the world`s leading multilateral trade agreement. .